Fortum sells unit in eastern Finland for $588 million

FILE PHOTO: Finnish energy company Fortum sign is seen at their headquarters in Espoo, Finland July 17, 2018. Picture taken July 17, 2018. REUTERS/Ints Kalnins/File Photo

(Reuters) - Finnish utility Fortum FORTUM.HE said on Friday it has agreed to sell its district heating business in Joensuu, eastern Finland to regional utility Savon Voima Oyj for 530 million euros ($588 million).

Fortum said it expects to record a tax exempt capital gain of approximately 430 million euros in the first quarter of 2020, when the deal is due to close.

“In line with our strategy, this is an excellent opportunity to extend our core district heating business to the Joensuu network in close vicinity to our existing networks,” Arto Sutinen, CEO of Savon Voima, said in the statement.

Fortum said it produced around 550 GWh of heat and 240 GWh of power in Joensuu last year.

Shares in Fortum were 0.5% lower at 1400 GMT.

Reporting by Tarmo Virki in Tallinn; Editing by Susan Fenton